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North American style “opt-out” class actions are finally coming to the UK, albeit with a number of unique procedural and substantive modifications. The recent amendments contained in the Consumer Rights Act 2015, which amends the Competition Act 1998, signal a historic shift toward class proceedings.

The Consumer Rights Act 2015 introduces the mechanism of “collective proceedings” which are, at first glance, very similar to US and Canadian class actions. Such “collective proceedings” must receive leave to commence, they must be brought by a “representative” and persons who do not wish to participate in them must “opt-out.”

However, the similarities end there. Unlike US or Canadian class actions, the UK “collective proceedings” commenced pursuant to the newly-enacted Schedule 8 of the Consumer Rights Act 2015 cannot be brought before a court. They must be commenced before the Competition Appeal Tribunal. The Competition Appeal Tribunal’s jurisdiction is restricted to cartel conduct and abuse of dominant position, which restricts the availability of opt-out class actions in the UK to these areas of competition law.

It is the Competition Appeal Tribunal that will decide whether “collective proceedings” may commence by making a “collective proceedings order.” Unlike the multi-part and detailed certification tests outlined in US and Canadian legislation, the UK statute requires only that claims raise “same, similar or related issues of fact or law and are suitable to be brought in collective proceedings.” The “related” criterion suggests a more flexible certification test than either in the US or Canada. Notably, the terms “commonality” or “common issues” are not used in the amendments. This too may signal more flexible certification criteria than North American lawyers are accustomed to.

The Tribunal may authorize a person to act as the representative in collective proceedings even if that person would not fall within the class of persons described in the “collective proceedings order,” i.e. he or she would not be a class member. This opens the door to public interest litigation commenced by consumers’ rights groups, academics and other interested bodies that may not have suffered damages from the anti-competitive conduct themselves, but have the resources and motivation to pursue the proceedings on behalf of victims of anti-competitive conduct.

The Act also contains a geographic restriction. Persons resident outside of the UK are not included in the class, unless they opt in by contacting the representative.

The Tribunal is permitted to assess damages on an aggregate basis, without individual assessments. It can order that damages be paid to the representative plaintiff or any other person that Tribunal sees fit, for distribution to class members. All unclaimed damages are to be directed to a specified charity.

Finally, a “damages based agreement” (i.e. a contingency fee agreement) is unenforceable in respect of opt-out proceedings. This may prove a stumbling block to the growth of class actions in the UK. While some commentators have suggested that “conditional fee arrangements,” whereby the lawyers for the plaintiff obtain no fee if unsuccessful, but receive their standard rate plus a success fee if successful, may be permissible, this remains to be confirmed in future litigation. In the meantime, given the pervasiveness of contingency fees in North American class action litigation, and given the “loser pays” regime applicable to the UK opt-out collective actions, the unavailability of “damages based agreements” will present a serious obstacle to UK plaintiffs’ ability to utilize the new statutory regime to recoup damages from anticompetitive conduct. While this is an important start, much progress remains to be made before UK residents can be assured of a robust, well-functioning, regime that will allow them to practically assert their rights.

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